Claims that the government’s superannuation proposals will limit the ability of members to save are ‘misinformed’, according to industry consultant Rice Warner.
Using eight case studies to undergo modelling, Rice Warner found that all the case study fund members would reach the cap under proposed superannuation changes, with only three requiring “modest” non-concessional contributions to do so.
“We also note that members who are able to accumulate more than $1.6 million can keep the excess funds in a concessionally taxed accumulation fund,” the company said.
The eight case studies were of fund members aged 40-years-old, with super balances between $100,000 and $250,000. One half of the members earn $100,000 per year and the other half make $250,000 a year.
Rice Warner said most fund members would “mainly rely” on fund investment earnings and concessional contributions to reach the $1.6 million lifetime cap, but this would not apply to everyone.
“Certainly, there are other circumstances when a $500,000 non-concessional lifetime cap would not be enough to make $1.6 million in super by retirement. Such circumstances may include members, perhaps in their fifties, who have little super savings to date and want to ‘catch up’,” it said.
Rice Warner proposed areas where government policy could be more lenient, as they anticipate the government will “aim to remove much of the angst triggered by its proposals” as it continues to work towards its goals for the superannuation system.
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